Allied Capital Announces Third Quarter 2006 Financial Results Quarterly Dividend of $0.62 Per Share Declared.WASHINGTON -- Allied Capital Corporation (NYSE NYSE See: New York Stock Exchange :ALD ALD abbr. adrenoleukodystrophy ALD, n.pr See adrenoleukodystrophy. ALD aldolase. ) today announced third quarter 2006 financial results. Highlights for Q3 2006 * Net income was $0.53 per share, or $77.9 million * Net investment income was $0.33 per share, or $48.7 million * The total of net investment income and net realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. was $0.40 per share, or $58.6 million * Net unrealized appreciation was $0.13 per share, or $19.3 million * Third regular quarterly dividend of $0.61 per share was paid; fourth quarter dividend of $0.62 per share was declared * Net asset value per share was $19.38 * Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was $2.8 billion * New investments totaled $629.5 million for the quarter Operating Results For the three months ended September 30, 2006, net investment income was $48.7 million or $0.33 per share, which included stock options expense of $3.6 million or $0.02 per share and excise tax Excise Tax 1. An indirect tax charged on the sale of a particular good. 2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS. Notes: 1. expense of $2.5 million or $0.02 per share. For the three months ended September 30, 2005, net investment income was $46.1 million or $0.33 per share, which included excise tax expense of $1.3 million or $0.01 per share. Net realized gains were $9.9 million or $0.07 per share for the quarter ended September 30, 2006, and were $70.7 million or $0.51 per share for the quarter ended September 30, 2005. The sum of net investment income and net realized gains was $58.6 million or $0.40 per share for the three months ended September 30, 2006, as compared to $116.8 million or $0.85 per share for the three months ended September 30, 2005. Net income for the quarter ended September 30, 2006, was $77.9 million or $0.53 per share, after net unrealized appreciation of $19.3 million or $0.13 per share. Net income for the quarter ended September 30, 2005, was $113.2 million or $0.82 per share, after net unrealized depreciation of $3.7 million or $0.03 per share. Net income can vary substantially from quarter to quarter primarily due to changes in unrealized appreciation or depreciation and the recognition of realized gains or losses, which vary from quarter to quarter. As a result, quarterly comparisons of net income may not be meaningful. For the nine months ended September 30, 2006, net investment income was $140.2 million or $0.97 per share, which included stock options expense of $11.9 million or $0.08 per share and excise tax expense of $14.1 million or $0.10 per share. For the nine months ended September 30, 2005, net investment income was $100.2 million or $0.73 per share, which included excise tax expense of $5.3 million or $0.04 per share. Net realized gains were $543.0 million or $3.77 per share for the nine months ended September 30, 2006, and were $288.5 million or $2.11 per share for the nine months ended September 30, 2005. The sum of net investment income and net realized gains was $683.1 million or $4.74 per share for the nine months ended September 30, 2006, as compared to $388.6 million or $2.84 per share for the nine months ended September 30, 2005. Net income for the nine months ended September 30, 2006, was $211.2 million or $1.47 per share, including net unrealized depreciation of $471.9 million or $3.27 per share. Net income for the nine months ended September 30, 2005, was $544.7 million or $3.99 per share, including net unrealized appreciation of $156.0 million or $1.15 per share. During the third quarter, the company invested a total of $629.5 million. After principal collections related to investment repayments or sales of $116.3 million and valuation and other changes during the quarter, the total portfolio at value was $4.1 billion at September 30, 2006. At September 30, 2006, the overall weighted average yield on the interest-bearing portfolio was 12.3%, as compared to 12.8% at December 31, 2005. Shareholders' equity was $2.8 billion at September 30, 2006, with a net asset value per share of $19.38 as compared to $2.6 billion or $19.17 per share at December 31, 2005. Private Finance The private finance portfolio totaled $4.0 billion at value at September 30, 2006. Loans and debt securities, which totaled $2.9 billion at value at September 30, 2006, had a weighted average yield of 12.5%, as compared to 13.0% at December 31, 2005. New private finance investments totaled $629.2 million during the third quarter of 2006, which was composed of $103.0 million of senior loans, $239.3 million of unitranche debt, $190.5 million of subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". and $96.4 million of equity. These investments included: * $157.1 million to support the management-led recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. of BenefitMall, Inc., a general agent focused on the small-group employee benefits market; * $63.0 million to support the buyout of Stag-Parkway, Inc., a distributor of aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. parts and accessories to the recreational vehicle industry; * $59.1 million to support the recapitalization of Penn Detroit Diesel Allison LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , an authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: distributor of new equipment and aftermarket parts, as well as a provider of maintenance, repair and overhaul Maintenance, Repair and Overhaul or MRO is a multi-billion dollar industry which works on international authorization rules to deliver a safe airline operation and to assure reliability and availability of customer fleets. services to the heavy-duty truck industry; * $56.2 million in the buyout of Coverall cov·er·all n. A loose-fitting one-piece work garment worn to protect clothes. Often used in the plural. Noun 1. coverall - a loose-fitting protective garment that is worn over other clothing North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Inc., a commercial cleaning franchise organization; * $37.5 million to support the recapitalization of CSAV CSAV Center for the Study of Active Volcanoes (University of Hawaii) CSAV Compañía Sud Americana de Vapores (Chilean Shipping Company) CSAV Chief of Staff Aviation , Inc., a supplier of audio visual mounting equipment, lifts, stands, display accessories, and furniture used primarily to support the flat panel display A thin display screen for computer and TV usage. The first flat panels appeared on laptop computers in the mid-1980s, and the LCD technology became the standard. Stand-alone LCD screens became available for desktop computers in the mid-1990s and exceeded sales of CRTs for the first time and digital projector See data projector. markets; * $36.5 million to support the recapitalization of Sweet Traditions, LLC, a franchisee of Krispy Kreme Krispy Kreme is a chain of doughnut stores. Its parent company is Krispy Kreme Doughnuts, Inc. (NYSE: KKD), based in Winston-Salem, North Carolina, United States. Doughnut Corporation; * $30.1 million to support the acquisition of York Insurance Services Group, Inc., a third-party claims administrator providing processing, adjusting, and settlement claims services to insured members on behalf of insurance carriers; * $30.0 million to support the recapitalization of Bantek West, Inc., an outsourced provider of ATM services to customers including financial institutions, credit unions, non-bank ATM operators, and ATM equipment resellers; * $22.9 million to CitiPostal, Inc. and Affiliates, a full service document storage and management company; * $22.5 million to Meineke Car Care Centers Meineke is a company which runs a franchise chain of automotive service centers. Sevices offered at Meineke include replacing mufflers, brake work, oil changes, and other basic automobile maintenance. George Foreman has been the spokesperson for Meineke since 1993. , Inc., a franchisor in the car care sector of the automotive aftermarket industry, to support the acquisition of Econo Lube N' Tube, Inc., a franchisor of quick lube and general car care services; * $18.6 million to support the buyout of DCWV DCWV Direct Current Working Volts Acquisition Corporation, a designer, producer and supplier of scrapbooking products; * $18.1 million to support the buyout of Component Hardware Group, Inc., a supplier of hardware components, parts and plumbing products for the foodservice industry; and * $15.0 million in growth capital to Creative Group, Inc., a concept-to-completion development, production and post-production business. Portfolio Quality Allied Capital employs a grading system to monitor the quality of its portfolio. Grade 1 is for those investments from which a capital gain is expected. Grade 2 is for investments performing in accordance with plan. Grade 3 is for investments that require closer monitoring; however, no loss of investment return or principal is expected. Grade 4 is for investments that are in workout and for which some loss of current investment return is expected, but no loss of principal is expected. Grade 5 is for investments that are in workout and for which some loss of principal is expected. At September 30, 2006, Grade 1 investments totaled $1.1 billion, or 26.3% of the total portfolio at value; Grade 2 investments totaled $2.8 billion, or 67.2% of the total portfolio; Grade 3 investments totaled $153.4 million, or 3.7% of the total portfolio; Grade 4 investments totaled $57.9 million, or 1.4% of the total portfolio; and Grade 5 investments totaled $59.1 million, or 1.4% of the total portfolio. At December 31, 2005, Grade 1 investments totaled $1.6 billion, or 45.6% of the total portfolio at value; Grade 2 investments totaled $1.7 billion, or 48.0% of the total portfolio; Grade 3 investments totaled $149.1 million, or 4.1% of the total portfolio; Grade 4 investments totaled $26.5 million, or 0.7% of the total portfolio; and Grade 5 investments totaled $57.0 million, or 1.6% of the total portfolio. Loans and debt securities over 90 days delinquent totaled $44.9 million at September 30, 2006, as compared to $80.7 million at December 31, 2005. Loans and debt securities not accruing interest totaled $161.7 million at September 30, 2006, as compared to $155.8 million at December 31, 2005. In general, the company does not accrue interest on loans or debt securities where there is doubt about interest collection or where the enterprise value of the portfolio company may not support further accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. . As a result, loans or debt securities on non-accrual may be different than loans or debt securities that are over 90 days delinquent. Loans and debt securities that are on non-accrual status and over 90 days delinquent totaled $44.9 million at September 30, 2006, as compared to $60.7 million at December 31, 2005. Liquidity and Capital Resources At September 30, 2006, the company had cash and investments in money market securities of $46.0 million, a liquidity portfolio totaling $201.6 million, which included U.S. Treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. bills and money market and other securities, outstanding long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $1.6 billion, and no outstanding borrowings on its revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. . At September 30, 2006, the company had a weighted average cost of debt of 6.6% and its regulatory asset coverage was 278%. The company is required to maintain regulatory asset coverage of at least 200%. On October 16, 2006, the company repaid $150.0 million of unsecured long-term debt that matured. This debt had a fixed interest rate of 7.2%. The company used cash generated from operations and borrowings on its revolving line of credit to repay this debt. Quarterly Dividend of $0.62 Per Share Declared As previously released on October 20, 2006, the company declared its 173rd regular quarterly dividend of $0.62 per share for the fourth quarter of 2006. The dividend is payable as follows:
Record date: December 15, 2006
Payable date: December 27, 2006
The company's dividend is paid from taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . The Board determines the dividend based on estimates of annual taxable income, which differ from book income due to changes in unrealized appreciation and depreciation and due to temporary and permanent differences in income and expense recognition, and the amount of taxable income carried over from the prior year for distribution in the current year. Webcast/ Conference Call at 10:15 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Wednesday, November 8, 2006 The company will host a webcast/conference call at 10:15 a.m. (Eastern Time) on Wednesday, November 8, 2006, to discuss the results for the third quarter. PLEASE VISIT THE PRESENTATIONS & REPORTS SECTION OF THE INVESTOR RESOURCES PORTION OF THE COMPANY'S WEBSITE FOR A SLIDE PRESENTATION THAT COMPLEMENTS TODAY'S CONFERENCE CALL. All interested parties are welcome to attend the live webcast, which will be hosted through our web site at www.alliedcapital.com. Please visit the web site to test your connection before the call. You can also access the conference call by dialing (888) 689-4612 approximately 15 minutes prior to the call. International callers should dial (706) 645-0106. All callers should reference the passcode "Allied Capital." An archived replay of the event will be available through November 22, 2006 by calling (800) 642-1687 (international callers please dial (706) 645-9291). Please reference passcode "9045919." An archived replay will also be available on our website. For complete information about the webcast/conference call and the replay, please visit our web site or call Allied Capital Investor Relations Investor relations The process by which the corporation communicates with its investors. at (888) 818-5298. About Allied Capital Allied Capital Corporation, a leading business development company with total assets of more than $4 billion, has paid regular, quarterly cash dividends to shareholders since 1963. Since its IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. in 1960, Allied Capital has provided long-term debt and equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. to thousands of middle market companies. Allied Capital invests in the American entrepreneurial economy by providing capital to companies seeking a long-term financial partner and access to managerial resources often unavailable to smaller companies. In serving its shareholders, Allied Capital helps build middle market businesses and support American jobs. The Company's private finance portfolio includes investments in over 100 companies that generate aggregate revenues of approximately $12 billion and employ more than 85,000 people. Allied Capital provides flexible, competitive debt and equity capital for management and sponsor-led buyouts, recapitalizations, acquisitions and growth of middle market companies. Allied Capital's seamless, one-stop financing capabilities include first and second lien A Second lien financing is a form of financing secured on a second ranking basis by (more or less) the same security, which secures the first ranking financing. The first lien lenders and the second lien lenders agree that, in the event of a security enforcement or bankruptcy, the senior loans, unitranche debt, junior or mezzanine debt and equity. Headquartered in Washington, DC, Allied Capital offers shareholders the opportunity to participate in the private equity industry through an investment in the Company's New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Stock Exchange-listed stock, which is traded under the symbol ALD. For more information, please visit www.alliedcapital.com, call Allied Capital investor relations toll-free at (888) 818-5298, or e-mail us at ir@alliedcapital.com. All media inquiries should be directed to Stan Collender of Qorvis Communications at (202) 448-3131. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and these factors are enumerated This term is often used in law as equivalent to mentioned specifically, designated, or expressly named or granted; as in speaking of enumerated governmental powers, items of property, or articles in a tariff schedule. in Allied Capital's filings with the Securities and Exchange Commission. [TABLE OMITTED] [TABLE OMITTED] |
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